Tax and Employee Benefits Policy Under the Trump Administration

Labor & Employment Newsletter - October 2017

October 30, 2017

Blog Highlights:

Tax and Employee Benefits Policy Under the Trump Administration

What Employers Should Know

With any new presidential Administration comes new developments for employers to monitor on a wide variety of topics, and tax and employee benefits policy is no exception. The Trump Administration has been reviewing key components of ERISA, the Affordable Care Act and the Internal Revenue Code, and has already implemented regulatory changes that employers need to consider in maintaining an employee benefits program for their workforce. 

The following summary addresses some of the Administration’s key efforts at changing policy in this complex and technical area:

Affordable Care Act

While legislative changes have proven to be very difficult to get through this Congress, new regulatory guidance is already having an impact on the Affordable Care Act ("ACA"). The structure of the ACA allows for many of its provisions to be implemented by regulation. With a change in Administrations, new priorities are pursued by administrative agencies, and different interpretations of statutory text can lead to drastically different results. 

Here are a few of the significant recent regulatory developments:

Proposals to Change the Tax Code

Proposals for comprehensive tax reform could impact employee benefits programs as well. Legislative efforts promise a reduction in tax rates for all wage earners, potentially changing the need for deferred compensation programs. 

Further, while current proposals keep many of the existing tax benefits for qualified plans (such as 401(k) or profit sharing plans) those tax benefits may be modified or limited as the legislation works its way through Congress. Comprehensive tax reform legislation may also take aim at the exclusion from income for employer-provided health insurance, a tax subsidy that costs the Treasury $236 billion per year. Elimination of that tax subsidy would raise significant tax revenue while creating greater transparency to employees as to the cost of coverage. 

Employers and plan sponsors should regularly review the compliance of their plan documents and the administration of their benefit programs while keeping an eye on potential changes coming out of Washington. Please contact your regular Hinshaw attorney if you have any questions about these developments.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.